U.S. Base Oil Price Report


Nynas lowered the price of its naphthenic base stocks by 20 cents per gallon effective Wednesday, Oct. 8. This move rounds out the price cuts at the same level issued by other producers of pale oils earlier this month.

But further discounted prices for pale oils could be halted in the wake of an unexpected outage at the San Joaquin Refining plant in Bakersfield, Calif., that occurred last week.

San Joaquin expects to replace a faulty unit on Oct. 20, and then a restart should follow shortly. SJR believes that it will lose between two to three weeks of production. Meanwhile, direct customers are on a 100 percent allocation of light grades until further notice. Heavier pale oil production has not been interrupted during this downtime.

Another key naphthenic producer pointed out that, in addition to softer crude values, a slowdown in the downstream sectors along with uninterrupted production at most naphthenic plants (the exception now being SJR) had previously placed downward pressure on pale oil prices. The Lyondell Houston Refining Co. site is slowly making a full recovery from an earlier production interruption caused by the wrath of Hurricane Ike.

The general weak economic outlook, which has wreaked havoc on many other businesses including automotive, process oils and other industrial end-use segments, has also been credited for the recent build in naphthenic inventories.

On the paraffinic side, market circumstances remain more difficult, sources lamented. Although Flint Hills Resources extended a 20 cents per gallon price reduction on all its API Group II base stocks earlier this month, no other producers have followed. Moreover, market players said they did not expect the likes of Motiva or ExxonMobil to step out with price decreases any time soon, given the complexity of supply/demand dynamics.

Several potential buyers said they had pursued a number of producers attending this weeks ILMA Annual Meeting about receiving additional volumes. But the general response was not in favor of buyers. Producers said that inventories were still depleted, and it would likely not be until April or even June before availability improves. Currently several strict sales allocation programs are in place, and a few producers also maintain force majeure positions.

At the close of the Tuesday, Oct.14, NYMEX session, light sweet crude future prices settled at $78.63 per barrel, down $11.43/bbl from the week earlier settlement at $90.06.

Carolyn L. Green, based in Houston, can be reached directly at carolynlgreen@gmail.com.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

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